Final Strategic Plan for the United States Postal Service

Strategic Plan for United States Postal Service Roberto W Zayas University of Phoenix Table of Contents Executive Summary| 2| Company Background| 4| Vision, Mission, and Values Statement| 5| Environmental Analysis| 6| Non-Economic Factors in Remote Environment| 8| Competitive Analysis| 10| Strategic Analysis and Choice| 12| Plan Goals and Implementation| 14| Critical Success Factors| 16| Controls and Evaluations| 16| Conclusion| 17| References| 19| Executive Summary The United States Postal Service (USPS) is currently one of the largest companies in the United States.

The USPS is currently in a situation where revenues are down and debt continues to increase. Intense competition in the express package delivery industry and government regulations at the USPS has made it difficult to compete and remain fiscally effective. For a company that operates in an intensely competitive industry it becomes increasingly important to operate strategically and fiscally responsible. The USPS is a major player in the industry, but may not be able to hold on to that position if changes are not made for the organization.

The USPS has many options that are available in order to maintain an industry position and operate effectively. The current issues at the USPS are as follows: * Increased debt, due to pension and benefit obligations and increased fuel costs. * Lack of flexibility through passage of laws and government regulation. * Labor relations being made and negotiated by Labor Unions. With these issues at the USPS a different approach must be taken in order to keep the company an industry competitor and financially sound. For a company to stay successful a strong strategic plan must be put in place.

This report details steps for the USPS to take in order to stay successful and financially effective. The strategic options for the USPS are as follows: * Implement a mission and values statement. * Decrease debt by creating new products and services that can be offered using the monopoly the company currently holds. * Renegotiate workers contracts to increase liquid assets. * Create strategic alliances with international shipping companies to provide more effective delivery and shipping options for the customers.

These strategic steps will help the USPS achieve the goals of any organization that does business in the United States, to be effective in providing customers with products and services they need and to be financially stable. Strategic Plan for United States Postal Service The USPS for many years has operated under strict government scrutiny and in recent decades has had to deal with an increase in competition. For the longest time the USPS was the only shipping means for the American public.

However, in the current market place customers have the option to choose a different company for their shipping and delivery needs. The company background of the USPS is long and rich and embedded in the history of the United States. The first topic discussed is the lack of a mission and values statement. An environmental analysis will display the internal environment and the external environment at the USPS along with the industry it competes in. In the external environment a competitive analysis was conducted to showcase the need for the strategic plans the USPS must adopt in order to stay effective and competitive.

A detailed plan will be discussed of what the strategic choices for the company are, and an implementation plan that will have the company operating competitively within 2 years. Company Background The USPS is an independent agency of the United States government and is perhaps the largest in the country. The USPS has been in operation since 1775 and is still the only mail carrier in the US. The USPS offers many different products and services to its customers, “United States Postal Service (USPS) is a government owned company, engaged in providing mailing services.

These services include multi-featured mailing services and special value added services” (DATAMONITOR: United States Postal Service, 2011, p. 4). USPS offers regular postal mail delivery 6 days a week and offers different package delivery options such as First Class, Priority and Express shipping. Customers can also ship regular mail under these distinctions. The customer also has the option to send mail registered and with delivery confirmation to give customers’ piece of mind that the package will arrive where it needs to go.

In many post offices in the United States customers can also apply for a passport and many locations offer the PO Box service to its customers. The USPS over the years have been given awards and distinctions around the workforce and the business. “Black Enterprise and Hispanic Business magazines ranked the Postal Service as a leader in workforce diversity. The Postal Service has been named the Most Trusted Government Agency six consecutive years and the sixth Most Trusted Business in the nation by the Ponemon Institute” (“Postal Service Faces New Reality”, 2011).

Behind WalMart the USPS is the largest civilian employer in the United States and just as diverse as the USPS workforce is, the organization has a diverse customer base also. The customer at the USPS is every American male and female. If an individual were to stand at the door of one of the post offices in a metropolitan area, he or she will see an array of people from all ages, lifestyles, ethnic origins, and economic positions. The USPS has the unique position of catering to almost every market available in the United States. Vision, Mission, and Values Statements

Every organization needs to have a strategy in place that will continue to make it successful. Most companies believe that it starts with the mission statement of the company. A company will not survive or find it difficult to function if it does not have a purpose for doing what it does. When organizations try to implement new strategies or initiatives they must come from the core of the business and that starts with the mission, vision and values statements. “[The mission statement] provides managers with a unity of direction that transcends individual, parochial, and transitory needs.

It promotes a sense of shared expectations among all levels and generations of employees. It consolidates values over time and across individuals and interest groups. It projects a sense of worth and intent that can be identified and assimilated by company outsiders. Finally, it affirms the company’s commitment to responsible action, which is symbiotic with its need to preserve and protect the essential claims of insiders for sustained survival, growth and profitability of the firm” (Palmer & Short, 2008, p. 455).

The USPS for a long time did not have such extreme competition as it faces today, and because of the USPS being the only mail carrier in the US they don’t have a mission or values statement to date. Environmental Analysis In order for any company to successful it must be aware of where it has opportunity and where it has strength. For a company to understand fully where it can have opportunity is becomes important for the company to examine the environment it operates in. The USPS operates in the postal delivery and express package delivery industries.

This industry is an extremely intense industry to compete in due to the lack of competition. The industry is dominated by three major players, FedEx, UPS, and USPS. The USPS as a whole operates with close government scrutiny and a business model that doesn’t allow much flexibility, as other privatized organizations have. This environmental analysis will display the internal environment at the USPS and the external environment. The non-economic factors and an analysis of the competitive environment will show how the market has intense competition.

Also, the long term goals and objectives for the USPS will be discussed. Internal Environment The current situation at the USPS is not the best and unless changes are made it will continue to go downhill. The USPS has been hit very hard by the recent recession by seeing a decrease in mail volumes and continuing to operate at a loss. With the USPS operating under close government scrutiny it becomes difficult for the USPS to operate and do things that will help the company to be successful. Issues The first major issue for the USPS is the fact that there is no mission and alues statement, every company to be successful needs to have a common thread that holds the entire company together and sets the goals for the company. “The mission statement provides managers with a unity of direction that transcends individual, parochial, and transitory needs. It promotes a sense of shared expectations among all levels and generations of employees. It consolidates values over time and across individuals and interest groups. It projects a sense of worth and intent that can be identified and assimilated by company outsiders.

Finally, it affirms the company’s commitment to responsible action, which is symbiotic with its need to preserve and protect the essential claims of insiders for sustained survival, growth and profitability of the firm” (Palmer & Short, 2008, p. 455). The USPS for a long time did not have such extreme competition as it faces today, and because of the USPS being the only mail carrier in the US they don’t have a mission or values statement to date. With the mission statement being an intricate part of any company the USPS must adopt a mission and value statement to make major changes in the service and products it provides to the customers.

The second major issue for the USPS is the lack of flexibility when it comes to making decisions for the business. The USPS has many different factors that affect how the company is run and how it operates. First, it has the Postal Regulatory Committee that oversees the company and monitors how the business is running. Aside from the Postal Regulatory Committee the USPS must have Congress approve or deny any type of changes that are to be made to the company. Thirdly, the company works extensively with Postal Workers Unions, which also greatly affects the flexibility the company needs to see in order to be competitive.

External Environment With a company that competes in an intensely competitive industry, which has a positive outlook, the USPS must look at these indicators to determine a strategic plan of action. Due to the recent recession the USPS saw a drastic decrease in mail volumes due to consumers and businesses looking for a more economical means of communicating. With the rise of email and other means of electronics communications (i. e. : online bill pay) the USPS continues to see a decrease in mail volumes and this trend continues to see advancement.

The major threat to the USPS that will continue to affect the company in the near future is consumers’ needs to get things faster and finding easier ways to get things done. “A marketplace increasingly migrating to digital means of communication, a steady decline in mail volumes through 2020, and a less profitable mix of mail in coming years” (United State Postal Service, 2011, p. 27). According to Geddes (2004) in 2002 the USPS saw a decline by 1. 28 billion pieces of mail, which is a decrease of over 1 percent. With this increase of migration to digital technology this is the major economic indicator for the USPS.

The company will only continue to record losses. Non-Economic Factors in Remote Environment Political Although the USPS is no longer a part of the Executive Branch of the United States government the company still encounters much political activity. The USPS is governed by a Board of Governors and is regulated by the Postal Regulatory Commission. With the Postal Reorganization Act the USPS was developed to operate more like a business, however, the USPS still operates under the supervision of the United States government.

In 2006 Congress passed the Postal Accountability and Enhancement Act (PAEA) which granted the USPS the ability to be more flexible with pricing, create new products, and retain earning so that it could finance necessary capital investment and repay its debt (Carbaugh & Tenerelli, 2011). The passage of PAEA shows that US government still has a hand in the day to day operations of the company, and for the USPS to alter operations or pricing the changes must be approved by the United States Congress.

With Congress having to approve or deny changes within the USPS it becomes increasing difficult for the USPS to run efficiently. The USPS must comply with many laws and regulations that have been set forth by Congress. Federal law limits the amount of control the USPS has over labor costs, pricing determinations, mail delivery, and retail operations. According to Carbaugh and Tenerelli (2011) the postal service was considering consolidating postal outlets to reduce excess capacity, however, following congressional complaints the number under consideration went from 3,000 postal outlets and was reduced to 157.

With numerous restrictions on the USPS the political system in the US has many limitations on what the USPS can and cannot do to run the business effectively. Technological In the past the USPS has enjoyed much success it the express shipping and parcel industry, however, now individuals are not using the post office as much as in the past. The post office has seen steady decline in mail volumes due to the rise in digital communications. A major social and cultural move is companies using digital means of communications with its customers.

Previously businesses would use the post office as means of getting flyers and communications to its customers, however now digital means have taken over. “Through electronic mail, people can send written messages instantaneously anywhere in the world at low cost. New technologies, such as direct broadcast satellite (DBS) allow users to receive those messages without accessing their computers. The wide availability of facsimile machines and cellular phones, as well as lower long-distance telephone rates, have also played their part” (Geddes, 2004, p. 62).

With a rise in electronic communication the USPS has seen a reduction and will continue to see a reduction in mail volumes. Competitive Analysis In the United States the express shipping and parcel (express) industry is an intense industry with revenues in the billions with few competitors. The current competitors in the United States are large companies that offer many services to its customers and continually struggle to grab a larger market share. With few competitors in the industry companies feel the intense amount of competition from operating in the industry. The US market is dominated by leading players such as United Parcel Service (UPS), FedEx, and United States Postal Service (USPS) who make for formidable incumbents to new entrants” (Datamonitor Group, 2011). The top three companies offer many of the same shipping products and services to customers making the express industry a more competitive landscape. Pricing The USPS does not have much flexibility when it comes to pricing. The Postal Reorganization Act of 1970 set about regulations and rules when in determining pricing at the USPS. The Postal Reorganization Act was passed by Congress in 1970 to change a funded government department (The Post Office Department) into an autonomous public corporation, The U. S. Postal Service, directed to break even except on operations specifically subsidized by Congress” (Sherman & George, 2001, p. 685). The USPS is an agency that has restrictions placed on it by Congress and the company is limited to make certain decisions that could change the direction and course of the company. In terms of pricing, Congress has mandated the USPS to provide a uniform price and quality to all Americans, irrespective of geography.

The USPS doesn’t have much flexibility and competitive ability when it comes to pricing against the other national companies, such as FedEx and UPS. Market Analysis The express industry, with the intense competition, is still able to see growth and development. In light of the recent recession many companies saw a steep decline in business. According to Datamonitor Group (2010) the US express market is expected to have total revenue of over $79 billion dollars making the express industry to be one of the most lucrative markets with forecasts predicting an acceleration of 7. % over the next five years (Five Forces Analysis). The growth forecasted for this industry shows continuous growth over the next five year period, which has many factors that contribute to this. The express industry enjoys many benefits and which is part of the reason why there is very little competition. The industry is dominated by the big three companies, UPS, FedEx, and USPS, which means that new entrants into the market have to contend with nationally and internationally recognized brands, therefore product differentiation would be the only key to a new entrants success.

In the industry we see very little buyer power, with numerous buyers and many companies that rely heavily on the “just-in-time” services that these companies offer weakens the power of the buyer. With few competitors customers are forced to choose one of the three competitors to use for their shipping needs. Long-Term Objectives In order for the USPS to survive and maintain a position in the industry the long-term goals and strategies must be put in place. First, would be to implement a mission and values statement. Giving the company a purpose and reason for operating and existing is essential to the daily business of the company.

The second objective to be met would be to decrease debt by creating new products and services that can be offered using the monopoly the company currently holds. With the company having such a high amount of debt the creation of products and services will continue to help drive business. The third objective for the USPS would be to renegotiate workers contracts to reduce the amount of cash flows that gets paid out annually in one lump sum to the postal workers for health and retirement benefits, thus giving the company more cash flows to spend on the creation of new products, services, and updating outdated systems and locations.

The forth objective for the post office is to create strategic alliances with international shipping companies in order to provide more effective delivery and shipping options for the customers. Strategic Analysis and Choice The United States Postal Service is currently at a turning point where the leaders can make decisions to either make or break the organization. The USPS for the past few years has been hit reduction in mail volumes, heavy governmental regulations, and financial obligations. These issues require the USPS to look differently at ways they can do business differently and operate differently.

The USPS must find ways they can differentiate themselves from the competition by providing products or services that no other company can provide by looking at the monopoly they currently hold over the express package delivery industry. The issue of the government continually regulating how the USPS can operate how the company operates is an issue that deters the USPS from being strategically competitive. One way the company chose to be strategically competitive was joining in a joint venture with FedEx, a direct competitor, for the delivery of international packages.

The USPS must find ways to differentiate their products and services, how to operate competitively under governmental scrutiny, and create joint ventures that will help the business in the long term. For any organization that competes in an intensely competitive industry it becomes increasingly important for a company to find ways to stay competitive. Target Corporation chose to create a niche in the industry through product differentiation. General Motors created a joint venture with a direct competitor, Toyota, in order to be strategically competitive.

Google, just as the USPS, compete in an industry with intense government regulation and Google found ways to deal with the regulations. Finally, Toyota Financial Services chose to expand on its product line and differentiate itself from the competition. With the benchmarking between other organizations that faced the same issues, the USPS in order to become a much stronger competitor in the industry it can look at the different scenarios handled by Target, GM, Google, and Toyota Financial Services.

Product differentiation can be beneficial to an organization like the USPS that has an extensive network and resources available would help the company competitively just as differentiation helped Target and Toyota Financial Services. Finding ways to work with the intense government regulations just as Google has will allow the USPS to work more effectively and independently. Also, creating joint ventures with other shipping companies around the world and in the US can help the USPS much like it helped GM.

The USPS is in a place where it can make effective decisions to become more competitive in the express package delivery industry, by taking a note from such industry giants as Google, GM and Target the USPS can begin to compete more effectively in the industry. Plan Goals and Implementation The changes that need to be made to the USPS are changes that can happen efficiently if action is taken quickly. The first goal that must be achieved for the USPS is to have in place a mission statement that sets the tone for the culture and the purpose of the organization.

The USPS currently does not have a mission or values statement that helps to drive the daily operations of the business. The new mission and values statement of the USPS will be as follows: Our mission is to make the United States Postal Service the preferred shipping and postal delivery destination for the American public by delivering outstanding value, continuous innovation and relevant products with trusted universal postal service. This mission statement will guide the USPS into a new era of operating.

By keeping the American public in mind and ensuring that it delivers value to the customers with product innovation and the trusted universal service it will help keep the USPS a major competitor in the industry. The new mission statement will be put in place within 6 months and must be approved by the Board of Governors by the end of the second quarter in the fiscal year. The second goal of creating new products and services in order to create revenue and decrease debt will be evaluated and analyzed by the executive leadership team including Paul Vogel, Chief Marketing/Sales Officer, and Megan Brennan, Chief Operations Officer.

For this task they will be assigned to find ways that can make the USPS run more efficiently, where there can be waste cut throughout the organization, and determine, by using a Customer Relationship Marketing system, what the customers of the USPS want. The company continues to accrue debt and the only way to reduce the debt and become a profitable organization is to ensure that process efficiencies are being made and that the company provides relevant products and services to its customers.

The new products and services should be evaluated and within 1 year the company should have at least 5 new products and services that meet the needs of the customer. The new product line will be available for the customer within 6 months from the beginning of the New Year. The third goal to be achieved is to renegotiate labor contracts to give the USPS more flexibility with health benefit and retirement pay outs. The current system in place for the payment of retirement and health benefits, required by the PAEA, states that the USPS must pay out retirement and health benefits in a one lump sum payment at the beginning of the fiscal year.

For a company that does not have very much liquid cash this can be detrimental and require the company to take on more debt and become financial more indebted. Therefore, this requires negotiations with labor boards and creation and passage of a law in Congress in order to give the company more flexibility. The individuals responsible for this task will be Anthony Vegilante and the VP of Labor Relations, along with the Judicial Officer and the VP of Government relations.

The flexibility is required for the organization to stay effective and the contract negotiations must happen by the end of the first year, contracts must be finalized within 18 months, put in place, and passed in by Congress within 2 years. The final goal for the USPS to meet in order to be strategically competitive is the company can create strategic alliances with foreign shipping companies. The USPS currently has an agreement with eBay GC and China Post that allows consumers who shop on eBay to purchase to track their purchase internationally and allows delivery of soft goods internationally.

This agreement gives the company a greater opportunity to increase delivery volumes. More strategic alliances such as the one with eBay and China Post are necessary for the USPS. If the USPS would create more strategic alliances with Postal Services in Europe, Asia, and Latin America it gives the USPS an advantage over the competition to create more shipping locations for customers and increase package volumes. The individuals responsible for the task of creating more alliances with foreign delivery companies and postal services are Paul Vogel; President and Chief Marketing/Sales Officer; Megan J.

Brennan; Chief Operating Officer; and Giselle Varela; VP of Global Business. This task will create newer strategic alliances with foreign shipping agencies and postal services increasing volumes and must be completed within 2 years. Critical Success Factors The critical success factors for the USPS are competitive strategy and industry position. “Critical Success Factors (CSF’s) are the critical factors or activities required for ensuring the success your business. The term was initially used in the world of data analysis, and business analysis.

Critical Success Factors have been used significantly to present or identify a few key factors that organizations should focus on to be successful” (“Critical Success Factors Analysis”, 2007). The USPS currently has a monopoly over the industry therefore limiting the amount of competition they are to the other bigger privatized companies. The USPS would need to adopt a competitive strategy based around a mission and values statement and create a place for them in the industry where the company can maintain the monopoly over the industry and compete like a private organization.

If the USPS is able to compete on the same level as other private organizations, such as FedEx and UPS, the USPS will be able to be more competitive in the industry. Controls and Evaluation The controls and evaluation of the strategic plan for the USPS can be evaluated against many different things. The first goal to be achieved by the USPS is the creation of a mission and values statement. With the mission and values statement being the “glue” that holds the organization together will help the USPS maintain a focused approach to its business.

The use of Industry reports and Business Reviews will help the company to evaluate the new mission and values statements. Also, the use of annual employee opinion surveys will help the USPS determine whether it promotes a consistent culture in the organization. The second goal to be achieved will be to decrease debt by creating new products and services. This can be evaluated with research and development used toward the development of new products and services.

The USPS can utilize annual benchmarking, sales, customer retention, new customers, customer opinion surveys, cost analysis, and constant study of product line and product base to determine what products and services the customers want the USPS to provide. The third goal to renegotiate workers contracts regarding health and retirement benefits to give the company more liquid assets. This goal of employee contract renegotiation will be evaluated against industry reports, business reports, employee retention reports, quarterly and annual employee surveys.

The fourth goal of creating strategic alliances the USPS can utilize Industry reports, business reports, annual benchmarking, sales, customer retention, new customers, customer opinion surveys, cost analysis, and constant study to determine effectiveness of strategic alliances. Conclusion The USPS is in a great position to take the company in a different direction by using the monopoly to its advantage. If the USPS were to use the monopoly to its advantage and create products and services that only they could create, it would be more competitive.

The USPS has to put in place the strategic plan that will continue to keep the organization operating at its best. USPS has a background embedded in this nations’ history and in the culture of the American people. The USPS has been experiencing intense competition and operating at a loss for the last few years. The company has much strength, but there are many areas that need to be developed in order to succeed. Taking advantage of current consumer trends such as online shipping and shopping will continue to help the organization.